Downgrading Liberalism

Liberals now blame the Tea Party for America’s AAA credit downgrade. This is possibly the dumbest thing I’ve ever heard. It’s like blaming the 9/11 Commission Report on 9/11. It’s like blaming my bad 6th grade report card on report cards. It’s like blaming ladies for Lady Gaga. Simply because the debt problem continues to be the subject of debate does not make the debate itself the problem.

This remains true even when those responsible for the downgrade note the debate. Here’s the passage from the Standard & Poor’s report that Democrats have been using to blame conservative Republicans for the recent credit reduction: “The political brinkmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

In their hurry to blame the Right, many on the Left continue to focus on the word “brinkmanship,” but what they forget about is the brink. America is being pushed to the brink of what? The brink of debate? S&P spokesman David Beers explained in April: “So why the negative outlook on the U.S. government’s rating? In summary, it’s because when you look at the underlying fiscal challenges the U.S. government is grappling with, as well as the rising U.S. government debt burden, we think—absent a material fiscal consolidation program embraced by policymakers—that increasingly the U.S. government’s fiscal position will diverge from that of its key ‘AAA’ peers.”

The “material fiscal consolidation program” to address the “rising U.S. government debt burden” was the Cut, Cap and Balance plan passed by the Republican-controlled House and tabled by the Democratically-controlled Senate. This plan would have substantively cut spending, capped it for the time being, and would have begun the process of ratifying a balanced budget amendment to the Constitution. The Democrats called this plan too “extreme.” President Obama said “we don’t need a constitutional amendment to do our jobs.”

Sorry, but yes you do, Mr. President. In fact, most of history tells us we should have doubts as to whether Washington leaders would do their jobs even with such a constitutional provision. Recent history tells us that the Democrats have absolutely zero plans to “do their job” of spending taxpayer dollars wisely. If the GOP offered Cut, Cap and Balance, what substantive solution did the Democrats offer? None—other than the usual mantra of raising taxes on “the rich” and increasing spending. “The rich” are defined as anyone making above $250,000 a year—which includes most of the small businesses needed for any potential economic recovery. Some have estimated that even if we taxed “the rich” at 100% it wouldn’t keep the federal government operating for more than a few days. The very notion of raising revenues this way is not only absurd, but it would stunt any new potential economic growth. And no matter how you cut it, opposition to tax hikes does not represent red state unreasonableness—but liberals’ eternal red herring.

Spending cuts are an absolute necessity. Explained S&P in April: “While we’re mindful that the President and Congress are beginning to focus on some type of agreement and may possibly even have a broad understanding about the scale of a fiscal adjustment—roughly $4 trillion… We think—given the division of opinion between Democrats and Republicans—that will be very difficult to achieve over the next two years.”

The “division of opinion” between the same, old big government Democrats and the new crop of Tea Party Republicans will indeed be “difficult to achieve” precisely because only the GOP is thinking in terms of anything close to a “$4 trillion” cut or “fiscal adjustment.” The Obama-John Boehner agreement offers no actual cuts—only decreases in the amounts of proposed spending. Only in Washington, DC can increased spending be defined as a “cut.”

The real, seemingly permanent divide is not between Republicans and Democrats per se, but between the liberals who dominate both parties and the small group of conservatives currently residing in the GOP. For example, there were many conventional Republicans who opposed the Obama-Boehner deal because they said it “cut” defense spending. This is false. There aren’t any actual cuts in Pentagon spending any more than there are actual cuts to Democrats’ beloved domestic programs.

But there should be. Conservatism, in a word, is about limits. Liberalism has always relied on limitless government. Frustrated liberals who complain the Tea Party is oblivious to facts and history are right to be frustrated—as their post-New Deal, post-Great Society America now clashes with the new reality of economic unsustainability. The Tea Party doesn’t reject facts or history—hard financial facts now reject the history of much of American liberalism. The Left simply cannot imagine a less powerful federal government. This is also true of Republicans who can’t imagine a United States that isn’t the policeman of the world, another utopian project more Americans are agreeing must come to an end.

Nobody wants to hear that the big government party is over. It’s over. The current debate is now between the realists who accept it and the idealists who reject it—and to say the debate is the problem is to say there should be no debate.

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19 Responses to Downgrading Liberalism

While I agree with you on most things, I fear you could not be more incorrect in your call for a balanced budget amendment. A Constitutional amendment mandating a balanced budget will only serve to justify huge tax increases. I can hear the statists both left and right saying ‘we have to double your taxes. The constitution says so.’

It would be much better to have the federal government to restrict its function to the inumerated powers.

You must understand that calling for a Constitutional amendment on anything is simply a time tested GOP tactic to appear that “this time we’re really serious” while accomplishing nothing. The GOP has called for amendments on flag burning, late term abortion and a host of other issues knowing full well they will never pass. But it mollifies the rubes and then the Stupid Party can get back to business as usual.

For just that reason, I’ve am torn on the issue. Because my home state has a balanced budget amendment, forcing a modicum of fiscal restraint on the legislature, we will be running a small surplus this year. This is in spite of the chronic mismanagement of the state and the official unemployment numbers running at about 10%. Were it not for the limits placed on government by the amendment, I fear we, like so many other states, may also be looking at some form of default. Such restraint placed upon the Federal government would be a step in the right direction.

On the other hand, I certainly agree with you that a federal government restricted to the enumerated powers of Article I, section 8 could make the amendment superfluous. The difficulty is finding a means of restricting the government to such limits, when precedent, custom, the ignorance of the legislators, and the imagination of the public all conspire to undermine the authority of the document whereby such limits are guaranteed. How can one believe otherwise when we now have a president who can start wars without the permission of Congress who has the power “To declare War”? More to the point, how can one believe otherwise when we now have a people, to say nothing of a Congress, who will not remove such a president from office?

I find some irony in the statement: “I can hear the statists both left and right saying ‘we have to double your taxes. The constitution says so.’” You are absolutely right to say as much, both in your prediction of what shall come to pass and the implied judgment of the character of the statists. It may, therefore, amuse you to consider the recent invocation of Amendment XIV in the debt ceiling debate. There were a number of talking heads, or rather empty heads, who came up with an interesting way to interpret section 4 of the amendment. According to their reasoning, the fact that the amendment reads, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned”, means that we have to increase the debt. The Constitution says so. I conclude three things from this: first, you are absolutely right that the fundamental problem is whether we shall have a government restricted to the powers granted it in the Constitution; second, that a balanced budget amendment is meaningless when the rest of the Constitution is treated as meaningless and can be a tool to raise taxes; third, all this being the case, the debt is already used as a tool to raise taxes (i.e. to incur more debt which, in the final analysis, is the same thing) so, in a way, we already face the worst case scenario of a balanced budget amendment.

There is, however, one great but distant hope built into having a legally required balanced budget that is not present in our current system. As things stand, many citizens do not understand the costs of government spending even as they feel them. They have more and more trouble paying for groceries, for electricity, for gas, for health care, for a mortgage, and thus they grow angry at the grocer, the utility company, the oil company, the doctor, and the banks for the prices on all these things grow or at least stay high. But it is government spending and policy that lurks behind such inflated prices. As things stand, a citizen can remain ignorant of the price of such spending and policies even as they eat away his bank account, harm his ability to care for his children, and undermine his livelihood. Perhaps if the cost of policy was evident in a tax hike rather than hidden in inflated prices, we should see a quicker end to such harmful policies as the federal government habitually pursues.

Regardless, I am of two minds about the wisdom of a balanced budget amendment. It treats the symptoms of a much deeper disease. On the other hand, sometimes the symptoms themselves can do a great deal of harm.

It’s an incompetent institutions, so anything based on what it’s staffers say isn’t going to carry much wait.

They are not listened to by investors, who bought up U.S. T-Bills yesterday — the very financial instrument S&P downgraded.

Lastly, the S&P analysis actually provided cover for Obama. If you read between the lines, they did not like the fact that there was not a clean debt ceiling bill, falsely claimed that the United States “almost” defaulted, and stated “the majority of Republicans in Congress continue to resist any measure that would raise revenues.”

The United States has a lousy economy, a spending problem, and an unemployment problem that can easily be laid at Obama’s doorstep. Those are solid winning issues.

Bringing in an incompetent organization like S&P that provided a muddled “analysis” that appeared to indite the Tea Party doesn’t make sense to me.

Tax cuts don’t directly result in economic growth/shrinkage. It’s been proven time and time again using historical tax data and growth rates. And yes, increased taxes also don’t have definitive correlation to growth/shrinkage.

The reason Democrats are pointing the finger at the Tea Party is that the Democrats gave a good bit on spending cuts. The Tea Party steadfastly refused any increased taxes. As stated, the S&P rationale for the cut was due to brinkmanship/instability/unpredictable. I’d suggest that the Tea Party is justifiably pinned with the lion’s share of the blame given that they had the power to block any compromised solution and were the most inflexible to the desires their negotiating partner.

Let me get this straight, you think the solution to our problems is an UNCONSTITUTIONAL Balanced Budget amendment, an amendment that would eventually turn the fiscal and budgeting authority of the US Congress over to a judicial oligarchy?? If the framers of the Constitution thought a constitutionally mandated balanced budget was a good idea, they would have included from the start.

The BBA is probably one of the single worst ideas for a constitutional amendment since Prohibition, and like the Prohibition amendment will result in new federal bureacracy, and a whole lot of lawlessness. Eventually, it will also make Congress unnecessary, as a judicial review board will simply tell the executive what he can pay for and who to collect revenues from.

I know you wish to find any reason to not critique the Tea Partiers, but when one side of the debate refuses to even consider revenue and defense cuts as part of the solution, then the brink is indeed at hand.

All of this stuff about a constitutional amendment requiring a balanced budget seems like a product of sloppy half-baked thinking. For a very fundamental reason: in a pure fiat monetary system, where do you think money comes from? Think about it. Abstracting a few accounting technicalities, money itself comes from the sovereign government spending money it does not have, i.e. creating it.

And, less fundamentally, what do you do in the case of a genuine national emergency like when the Japanese attacked Pearl Harbor? “We’d like to respond but we won’t, because it takes a lot of money to fight a war and we can’t run a deficit. It’s against the constitution.” Even aside from that kind of scenario, it does make sense to borrow money to build basic infrastructure that will augment the economy’s productive capacity.

Even if you think the state should use deficit spending sparingly, it is obviously not a fundamental principle you put in your constitution. Though I do not identify as a conservative, I sympathize with many of the views people here express. You should realize that it is counterproductive for you to promote transparently silly ideas.

if ratified, bba would be constitutional. and yes cutting taxes will help a lot more than the status quo, or, especially raising taxes. i have lived thru tax cuts. of course it also helps to cut the damn spending, not just the rate of spending growth. if the war is necessary, it may get the votes. if congress doesnt actually get to vote on wars and funding them, before they get rolling, then all the people who oppose ccb+bba can have the caesar they really want.

You are right to note that real cuts are essential to any real solution. But it is a misunderstanding to say that a balanced budget amendment would be unconstitutional. Any amendment passed following the rules put forth in Article V is, ipso facto, constitutional. Save certain ways of tinkering with the Senate, after 1808 _any_ is constitutional. We could even give ourselves a real king, as opposed to an imperial president, if we so chose, provided we followed the procedures of Article V. Sure, the founding fathers did not see a need for the proposed amendments, but they did foresee a need for a procedure of amending. Nor need such an amendment require any new bureaucracy as it does not on the state level.

Not liberals, but neoliberals are to blame for deficit hysteria. The United States is not an insolvency risk for the simple reason it is a issuer of sovereign currency, not just a user. The threat facing this nation is lack of aggregate demand, not sovereign bankruptcy. That is basic modern monetary theory. The fact that the Tea Party, out of ignorance, and neoliberals, out of cynicism, espouse the same austerity nonsense is saddening.

Jack Hunter stated: ‘Liberals now blame the Tea Party for America’s AAA credit downgrade. This is possibly the dumbest thing I’ve ever heard.’

In the comments Steve J stated: ‘I don’t think bringing S&P into the discussion is helpful.’

I find both statements puzzling since it was Standard & Poors’ rating that downgraded the USA from AAA to AA+. Also listed in the reasons why S&P downgraded the USA was the fact that Republicans were willing to trash the credit worthiness of the US in order to attain a political solution.

With that in mind, Jack, you can not only blame liberals for the ‘dumbest thing you ever heard’ but the very organization (S&P) who downgraded the US. They said it in the news release. And since they were the ones who downgraded the US credit rating, how could they not be part of the discussion?

The whole notion that a Balanced Budget Amendment would solve the problem is hopelessly naive. The crooks in DC routinely ignore the Constitution, so why would they suddenly be “restrained” by a new provision, any more than they have been “restrained” by the old provisions. It would be like a teacher who discovers that some of his students have been copying off other students’ tests, and then decides to “solve” the problem by making the future test questions harder.

The truth, as Ron Paul has repeatedly pointed out, is that we will never solve anything as long as we treat this situation like an accounting problem that can be “fixed” by fiddling with the numbers. Instead, we need to start to seriously question the role of government in our society. Until we do that, we will just be rearranging the deck chairs on the Titanic.

We had the budget situation well under control after the enactment of PAYGO in the 1990s and the enactment of Clinton era tax rates. This is not that hard of a problem to fix if Bush 43 apologists will just accept that Bush 41 and Clinton got our fiscal house in order…and they screwed it up. Obama also needs to come off his position of just returning to Clinton era tax rates for those with AGI more than $250,000. Everyone needs to go back to the Clinton rates until we pay down the debt we piled up.

We can wait a couple of years before the higher taxes kick in, but changing the law now will be more than sufficient to convince the rating agencies that we are serious. Personally, I could care less what S&P’s opinion is, because the buyers of US Treasury debt have already demonstrated their absolute disregard for S&P by their actions after the downgrade.

He’s half right–we do need spending cuts. But he’s wrong in saying that tax hikes are out of the question. Revenue/GDP ratio is one of the lowest in many years.

I also think this statement: “Conservatism, in a word, is about limits. Liberalism has always relied on limitless government”–is nonsense. I’ve never heard anyone of any party or ideology, who believes this. The opponents of the vast warfare state are almost always on the left.

A Balanced Budget Amendment forces the politicians to actually have a vote on raising taxes directly. It’s much more politically expedient to “have a vote on raising the debt ceiling” than it is to “raise taxes.” People don’t understand currency and the politicians’ ability to devalue it. Those opposed to a Balanced Budget Amendment are in two camps: 1) Liberals who want to continue to spend us into oblivion & 2) people of good will that don’t understand how our monetary system works.